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| Author | Kyle Lin |
| Updated | August 28, 2024 |
China exported 19.6 GW of modules in July, down 11% compared to the 22.1 GW in June but increased 35% from last July’s 14.5 GW, according to InfoLink’s customs data. China has exported around 151.5 GW of modules over the January-July period, up 26% from last year’s 120.6 GW.
As of July, the top five largest markets importing Chinese modules are, by order, the Netherlands, Saudi Arabia, Brazil, India, and Pakistan, with monthly import accounting for 71% of the global total. Regionally, Europe, Asia Pacific, the Americas, the Middle East and Africa saw declines at different degrees in July, among which Asia Pacific and the Americas saw the deepest dip. The reason behind was the shrinking Pakistan and Brazil markets that affected China’s module exports.
European market
Europe imported around 8.5 GW of modules from China in July, down 8% MoM from June’s 9.3 GW and up 20% compared to last July’s 7.1 GW. Europe has imported 62.7 GW of modules during the January-July period, down 10% compared to last year’s 69.5 GW.
There are several factors that slowed down Europe’s inventory draw. The solar supply chain turbulence, policy uncertainties in the EU and several European countries, and subsidy cuts weakened the public’s willingness to install distributed generation projects. Some ground-mounted projects are postponed due to high financing costs and grid congestion. Moreover, demand for solar energy may decrease this year as Europe’s natural gas reserves are sufficient. Meanwhile, solar installation pace has slowed during July and August holidays, impacting the overall inventory draw. It’s expected that Europe demand will weaken in the third quarter and demand recovery hinges on the progress of ground-mounted installation.
In terms of prices, spot price for TOPCon modules in FOB terms in Europe stood at USD 0.09-0.13/W in July and averaged USD 0.116/W, staying pretty much the same compared to June. The average price is likely to come in at USD 0.10-0.11/W in August amid supply chain fluctuation. As Europe demand weakens in the third and fourth quarter, module prices may decline further slightly in the second half, as manufacturers seek orders.
Asia Pacific
The Asia Pacific imported around 5.2 GW of modules from China in July, down 14% MoM from 6 GW and up 52% compared to 3.4 GW of last July. During January to July, the market has imported 45.6 GW of modules, an increase of 107% compared to last year’s 22 GW.
Among the countries in the region, India imported the highest volume of Chinese modules, reaching 1.4 GW in July, an increase of 15% from 1.2 GW in June. As of July, India has imported around 11.8 GW of modules from China.
Pakistan, which accounts for the second largest share, imported 1 GW of modules in July, down 47% MoM from 1.9 GW in June. Pakistan has imported around 13.2 GW of modules during January and July.
India and Pakistan together account for 47% of the total imports in Asia Pacific in July. Australia, the Philippines, and Uzbekistan saw increases in import volumes, while Japan, Thailand, and South Korea saw slight declines.
Factors such as port congestion, tight space availability, and the impact of the Red Sea crisis have caused difficulties in shipping schedules, leading to extended delivery times at Chinese ports by 7-20 days. This has resulted in cargo backlogs at ports like Shanghai and Ningbo, where customs statistics reflect declared data that include quantities yet to be shipped due to the backlog. This has impacted China's export data to India for May and June this year.
In terms of policy, the Indian government issued a new ALMM exemption regulation in May this year, providing exemptions for solar-to-hydrogen projects that begin operations by December 31, 2030. The impact is expected to start showing from the end of this year and into the next. Additionally, some Chinese manufacturers anticipate further changes in policy and are therefore looking to export modules to India ahead of time to gain early market share.
In Pakistan, inventory draw in July aligned with the previous forecast. The local government has announced that no tariffs will be imposed on module imports, bringing favorable news for developers. In addition, with the increase in basic electricity rates starting in July, there is a boost in the incentive for the public to install distributed generation PV. Moreover, it is reportedly that Pakistan may deepen its cooperation with China, which could lead to a certain increase in demand for PV projects. However, as Pakistan has imported a large volume of Chinese modules in the first half of this year, the cumulative import volume has exceeded 77% of last year's total imports as of July. As a result, the inventory draw in the second half may be pressured by inventory, and the momentum for imports is expected to gradually slow down.
The Americas
The Americas imported 2.3 GW of modules from China in July, down 19% MoM from 2.9 GW in June and up 4% from 2.3 GW in last July. The region imported around 19.1 GW during the January-July period, up 15% compared to 16.6 GW of the same period last year.
Among countries in the region, Brazil accounts for the largest share in terms of Chinese module imports in July, where 1.4 GW of modules were imported. Comparted to June’s imports of 2 GW, it was an decrease of 28%, accounting for 61% of the total imports to the region. Brazil has imported around 13.5 GW of Chinese modules during the January-July period.
Brazil’s new round of import quota has renewed, which will implement from July 2024 to June 2025, with quota reducing to USD 1.01 billion, which translates to around 10 GW of modules if estimated by a price of USD 0.10/W. So far, the Brazil government has yet to release regulations on and quota for individual distributors; developments remain to be monitored.
On the policy side, the Brazilian government has introduced policies to boost distributed generation installations. Apart from a total of 9.25% of tax exempt for small-scale project developers for up to five years, it provides at least 50% of fee discount for users of micro and small-scale distributed generation PV systems. Moreover, the country initiated the Plano Safra 2024-2025 in July to support the development of agrivoltaics. Overall, these policies are expected to underpin demand in the second half.
The Middle East and Africa
The Middle East imported around 2.5 GW of modules from China in July, down 11% MoM from 2.8 GW in June and up 147% compared to last July’s 1 GW. The region has imported around 18 GW of modules during the January-July period, increasing by as high as 161% compared to 6.9 GW in the same period last year.
Among countries in the region, Saudi Arabia accounts for the largest share, having imported around 1.5 GW of Chinese modules in July, down 14% from June’s 1.7 GW, accounting for 58% of the region’s total imports. The country has importe around 10.2 GW of modules from China during the January-July period.
The government of Saudi Arabia has recently signed several partnership agreements with multiple developers and issued auctions for many utility-scale ground-mounted projects. Moreover, the government is set to auction 20 GW of renewable projects since this year, potentially boosting the medium to long-term demand, underpinning module demand in the future.
Africa imported around 1.1 GW of modules from China in July, down 2% from June’s 1.1 GW, up 56% compared to last July’s 0.7 GW. The region has imported around 6.1 GW of modules during the January-July period, up 11% compared to 5.5 GW in the same period last year.
Among African countries, South Africa accounts for the largest share, having imported 538 MW of modules in July, up 23% from 437 MW in the previous month, accounting for 50% of the region’s total imports. South Africa has imported around 2.1 GW of modules during the January-July period.
Recently, foreign developers started to develop PV plants in South Africa, while the local government announced at the end of June to impose 10% tariffs on solar module imports. In response, developers started inventory draw ahead of time in May and June, which, factoring in the shipping time, the import volume reflects in July, stimulating inventory draw for the short term.
Looking ahead, major PV markets are expected to see inventory remain flat or rise slightly. With overall demand weakens in Europe, inventory draw momentum will be limited in the third quarter. In the Asia Pacific, India may drive up Chinese module imports if it releases more ALMM lists in the future. Pakistan’s significant increases in inventory draw in the first half might impact the growth momentum in the third quarter and even the fourth quarter. The outcome of Brazil’s policy for boosting distributed generation PV remains to be monitored. Overall, the inventory draw worldwide in the third quarter is not likely to exceed the volume of 2023, potentially staying flat or even decline.